Opening Speech - EU Energy Policy and Competitiveness

17 November 2014

Maroš Šefčovič - Vice-President for Energy Union

Brussels, Conference on EU Energy Policy and Competitiveness

Ladies and gentlemen,

Today's conference could not be more topical. The events in Ukraine show all Europeans that the peace, stability and security we all have known since the fall of the Iron Curtain is fragile. In addition, we all know very well the complex environment and the new realities in the global energy markets. In particular several of them represent a serious challenge to our competitiveness.

Within the EU, energy bills for EU consumers are rising. This is in part due to the pressure of rising global demand on resources, but also to the costs linked to an ageing infrastructure and Member States' decisions on tariffs, levies and taxes. While Europe's dependence on fossil fuel imports is increasing, outside Europe, indigenous production of oil and gas is leading to a widening gap between industrial energy prices, in particular with the US.

Given all the great challenges ahead of us, President Juncker has made clear his intention to give priority for the coming years to the construction of a resilient Energy Union with a forward looking climate change policy. The choice of Energy as a key priority for the next 5 years has also been agreed by EU leaders in June. Today, I have the honour and the responsibility to bring forward this very important priority for the European Union. I want to build an Energy Union aiming at affordable, secure and sustainable energy". And I will work to ensure a more holistic approach to energy across policy areas: eEnergy, climate, transport, industry, research, digital economy, agriculture are all crucial for my project.

Hopefully, I will not start from scratch… Some important basis of the future energy Union have already been laid down. We have a policy framework for climate and energy for 2030 agreed at the highest political level by the European Council. This framework is built around three targets:

a binding EU target of at least 27% for the share of renewable energy;

an indicative target at the EU level of at least 27% is set for improving energy efficiency.

This agreement stands for a major success from the Commission's perspective – it confirms the Commission's proposals throughout 2014 and is in line with President Juncker's ambitions for a resilient Energy Union with a forward-looking climate policy. These EU targets represent one of the most ambitious commitment to combat climate change. From our perspective, this agreement is an important step to provide more certainty to our investors and will contribute to the promotion of jobs and growth in Europe.

We also have a European Energy Security Strategy to enhance our energy security which has been welcomed by the European Council. We have made substantial progress towards the achievement of the internal energy market. Our efforts towards this common goal are not new. All efforts must now be mobilised to bring this objective to full completion.

Ladies and gentlemen,

I already emphasized my vision of the Energy Union in front of the European Parliament. I defined five pillars which I am sure will contribute to our competitiveness and economic growth.

The first pillar would be built around security, solidarity and trust.

I am convinced we need to join our efforts to be able to push for fairer prices and more balanced market conditions. We are the biggest energy customer in the world and that costs us € 400 billion a year. We need to speak with one voice to lay down a more assertive European Energy diplomacy. To this end, we should:

Better coordinate our messages to resist undue pressure from third countries and to avoid market distortions. As agreed by the October European Council, Member States should duly inform the Commission on intergovernmental agreements with third countries in the field of energy, and seek its support throughout the negotiations.

Increase cooperation with our neighbours with a view to better integrate their respective markets. Let me emphasize the importance of the Energy Community in this respect. But also of the Mediterranean countries with which we will meet in Rome next week with a view to relaunching the Euro-Mediterranean energy cooperation.

Explore common purchasing of gas. Of course, we have to respect the competition and WTO rules.

Strengthen the policy coordination among us: no Member State should modify its energy system without prior consultation of its partners and without analysing the potential consequences on their systems. The Energy Union must aim to deepen cooperation and integration between the Member States.

To increase competition and obtain better conditions, we should continue the diversification of supply both as regards routes and sources. We should work intensely on the Southern Corridor to get Caspian gas to Europe. We must further develop our partnership with Norway, promote the project of the Mediterranean gas hub, including developing energy cooperation with Algeria. Moreover, the development of LNG terminals opens new possibilities of imports.

The second pillar would be dedicated to the completion of a competitive internal market.

The internal energy market should represent the backbone of the Energy Union. Its completion is a prerequisite if we want to maintain the competitiveness of EU industry and to secure affordable energy prices for our households. The Italian Presidency is rightly insisting on the necessity of a completed internal energy market. This topic will be at the centre of the December Energy Council. This requires increasing cross-border flows, more regional cooperation and a better connected infrastructure. Structural Funds, CEF, joint investments and the future EU Investment Plan can contribute to the financing of these energy infrastructure projects.

On 29 October 2014, Member States already voted in favour of allocating €647 million to 34 key energy infrastructure projects. This is an additional important step towards our goals.

I have already started to work with Mr Katainen, the Vice-President for Jobs, Growth, Investment and Competitiveness, to be able to present, within the first three months of our mandate, an ambitious investment package of which energy will be a main component. The package will mobilise additional public and private investment in infrastructure such as energy networks, as well as in renewable energy and energy efficiency…

Moderation of demand would be the third pillar.

To keep our energy bills in check and improve our energy security, we need to moderate our energy demand. Improving energy efficiency will not only increase energy security, but also enhance the competitiveness of European industries. I therefore fully support the European Parliament and President Juncker's commitments to energy efficiency. The review clause included in the 2030 package still offers us a window of opportunity to set a more ambitious energy efficiency target after 2020. I will work closely with my colleague Commissioner Arias Cañete, to make sure that a reliable and transparent governance system is developed to ensure that the EU meets its energy policy goals, while fully respecting Member States' freedom to determine their energy mix.

The decarbonisation of the EU energy mix would be my fourth pillar.

I want to continue the successful reduction of greenhouse gas emissions. A central pillar of the new 2030 Framework as agreed by our Heads of State or Government is the binding target to reduce domestic greenhouse gas emissions by at least 40% below the 1990 level by 2030. This target will ensure that the EU is on a cost-effective track towards meeting its objective of at least 80% reductions by 2050. By setting its level of climate ambition for 2030, the EU will now be able to engage actively in the negotiations on a new international climate agreement that should take effect in 2020.

Our aim is to make sure that our international partners take comparable efforts. This will be good for climate, but also for our companies, as we want them to compete on a level playing field. And there are indeed promising signs from third countries as evidenced by last week's political agreement between the US and China, the two countries that emit most carbon dioxide and that for the past 20 years were reluctant to commit to reductions.

I am also fully committed to maintain our global leadership in renewables technologies. The agreed target of at least 27% of renewables at EU level will contribute to reduce the EU's trade deficit in energy commodities, our exposure to supply disruption and to volatile prices of fossil fuels. This commitment will also contribute to create jobs in emerging sectors and sustain growth in innovative technologies

This brings me to my fifth point: Technologies

Further investment in research and innovation is crucial, not to achieve the EU2030 objectives, but also to sustain our economies, our competitiveness.

These are the five building blocks on which I believe we will be able to create a resilient Energy Union, coupled with a forward-looking climate change policy. While we are already working around these five pillars, it is my wish to engage in an inclusive dialogue with other EU institutions, Member States and stakeholders over the next year about the key priorities the Energy Union. In particular, the Energy Union must also provide a basis for how to achieve common objectives an all these areas and how to achieve a more European governance of energy policy.

We have to reach a common understanding on how to balance EU level initiatives and action on the one hand, and better coordination of national action on the other.

Today's conference can be seen as a starting point of this consultation and I very much look forward to a constructive and open exchange. EU has to speak with one voice – but a lot of political determination and willingness will be needed. In this vein, your support will be crucial.